EFFECTIVE IMMEDIATELY, January 1, 2007, a receipt is required for ANY AND ALL charitable contributions in order to take a tax deduction. In most cases, this is not an issue. However, it is definitely more paperwork.
In the past, you were allowed to estimate a reasonable amount for charitable contributions, including those donated in cash. So, many people were in the habit of saying they gave the same amount as last year, or they typically put $10 a week in the collection basket at church.
In the past, you were allowed to estimate a reasonable amount for charitable contributions, including those donated in cash. So, many people were in the habit of saying they gave the same amount as last year, or they typically put $10 a week in the collection basket at church.
The other place where this deduction was abused (although, not by MY clients) was that many people took "the standard charitable contribution." Such a standard deduction never existed. The misconception on this deduction arose from the statistics published by the IRS over the years. From time to time, the IRS conducts very detailed audit programs in which the taxpayers are required to produce a receipt for every line item. Believe me - you do not want to be selected for this type of audit. In some cases, they have even had to produce birth certificates. These audits are used to accumulate these statistics. So, for example, there may be pattern that says the average person who has an income of $100,000 gives $2,000 a year to charitable organizations. Many people have misinterpreted these numbers to assume that they were entitled to these deductions as long as they were within the "limits." The change in the law is designed to prevent that interpretation.
NOW, the rule has been changed. In order to obtain a deduction, only two types of proof are allowable to substantiate the deduction:
a) a bank record OR
b) an acknowledgement from the organization receiving the gift indicating the name of the donee organization, the date of the contribution, and the amount of the contribution.
No alternative records will be allowed to substantiate the contribution under the new rules.
NOW, the rule has been changed. In order to obtain a deduction, only two types of proof are allowable to substantiate the deduction:
a) a bank record OR
b) an acknowledgement from the organization receiving the gift indicating the name of the donee organization, the date of the contribution, and the amount of the contribution.
No alternative records will be allowed to substantiate the contribution under the new rules.
The picture above is a stained glass window inside the Notre Dame de Reims Cathedral in Reims, France. Many of the kings and queens of France have been crowned in this church. Reims is also the home of the famous champagne caves.
